Nepal Moves Forward on Reform Agenda

Last month more than 1,000 people gathered for the 2014 Nepal Economic Summit,a historic event hat brought attention to the challenges and opportunities to Nepal’s economic development.

More than 30 international speakers participated in the event including government officials, key ministers, business leaders, and civil society representatives. USAID Administrator Rajiv Shah also attended the event and gave some closing remarks.

CIPE partner Samriddhi, the Prosperity Foundation was the knowledge partner of the event and has been working closely with the government and stakeholders in formulating the reform agendas over the last two years, preparing discussion papers on key issues such as agriculture, energy, and tourism, outlining major challenges and making recommendations. The papers build on Samriddhi’s Nepal Economic Growth Agenda, launched in 2012. Samriddhi’s economic research has become an important source of independent policy analysis in Nepal.

Since becoming a federal democratic republic in 2008 by doing away with the longstanding monarchy and successfully bringing a decade-long insurgency to an end, democratic transition in Nepal has been a challenge. Nepal’s first Constituent Assembly dissolved in May 2012 without delivering a constitution but a rare opportunity emerged when the second Constituent Assembly elections were carried out successfully in November 2013.

During the November elections, a slight shift was observed in the interest of political parties in bringing forward economic agendas in the mainstream discourse. Nepali Congress being the largest political party in the newly formed second Constitutional Assembly, more momentum is expected in economic reform as this was the party which had led Nepal in the liberalization efforts of the 1990s. In this context, there was a need for a neutral platform for political and business leaders to come together to discuss economic issues of the country, understand the reality of persistent economic challenges, and search for mutually agreeable solutions. The summit was an effort in that direction.

After discussions on a range of issues, the participants agreed to a 19-point reform agenda to promote economic growth. Recommendations included identifying solutions to regulatory barriers that will increase Nepal’s ranking 10 places in the World Banks’ Doing Business ranking by 2016. Another recommendation calls for improving land management systems to allow contract farming and effective land utilization.

Additionally, the reform agenda has taken a step towards liberalizing the energy sector and has encouraged greater private sector participation to deal with Nepal’s prevailing acute electricity shortages. It also calls for revising incentive schemes to increase private sector participation in biomass production. Finally, the agenda recommends selecting five strategic locations to invest in improving tourism products and services and also improving infrastructure and facilities to increase tourist flows and tourism receipts.

Robin Sitoula is Executive Director of Samriddhi, the Propserity Foundation.

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